Correlation Between Becton Dickinson and Embecta Corp

Can any of the company-specific risk be diversified away by investing in both Becton Dickinson and Embecta Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Becton Dickinson and Embecta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Becton Dickinson and and Embecta Corp, you can compare the effects of market volatilities on Becton Dickinson and Embecta Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Becton Dickinson with a short position of Embecta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Becton Dickinson and Embecta Corp.

Diversification Opportunities for Becton Dickinson and Embecta Corp

0.36

Correlation Coefficient

Becton Dickinson  Embecta Corp

Weak diversification

The 3 months correlation between Becton and Embecta is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Becton Dickinson and and Embecta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embecta Corp and Becton Dickinson is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Becton Dickinson and are associated (or correlated) with Embecta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embecta Corp has no effect on the direction of Becton Dickinson i.e., Becton Dickinson and Embecta Corp go up and down completely randomly.

Pair Corralation between Becton Dickinson and Embecta Corp

Considering the 90-day investment horizon Becton Dickinson and is expected to generate 0.45 times more return on investment than Embecta Corp. However, Becton Dickinson and is 2.22 times less risky than Embecta Corp. It trades about 0.02 of its potential returns per unit of risk. Embecta Corp is currently generating about -0.26 per unit of risk. If you would invest  22,548  in Becton Dickinson and on December 29, 2024 and sell it today you would earn a total of  323.00  from holding Becton Dickinson and or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Becton Dickinson and  vs.  Embecta Corp

Becton Dickinson

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Becton Dickinson and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Becton Dickinson is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Embecta Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embecta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Becton Dickinson and Embecta Corp

The main advantage of trading using opposite Becton Dickinson and Embecta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Becton Dickinson position performs unexpectedly, Embecta Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Embecta Corp will offset losses from the drop in Embecta Corp's long position.

The idea behind Becton Dickinson and and Embecta Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.